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Digital nomadism has expanded considerably in recent years. Estimates suggest there are now more than 40 million digital nomads worldwide, while around 69 countries offer visas or residence programmes aimed at remote workers. Research cited by MBO Partners also found that the number of US workers identifying as digital nomads had increased by 147% since 2019.
However, while relocating may be perceived as easier or more accessible for expats who wish to live abroad without necessarily needing to change their employer or career, the financial aspects of living in a different country can be complex.
Chase Buchanan Private Wealth Management, specialists in supporting internationally mobile clients, shares insights into how evolving global mobility trends can potentially affect wealth strategies, and why financial planning needs to keep pace with each individual’s circumstances.
How Digital Nomad Visas Are Changing the Way People Relocate
Lee Eldridge, Chase Buchanan’s Group CEO and Head of Investment Advisory, notes that, ‘Global mobility is often seen as an opportunity for professionals and their families, but relocating to a different country often means revisiting financial planning, forecasts and budgets, because the considerations that are relevant may change considerably.
Understanding how income, investments and assets will be treated, taxed and where they need to be declared are all essential, helping expats make informed decisions about their financial strategies whenever they are planning a significant change such as a move to a new destination.’
While digital nomad visas are far from the only way for expats to settle overseas, their rapid adoption has had a notable impact. Schemes include Portugal’s D8 route for qualifying remote workers with overseas income, and Spain’s digital nomad visa for qualifying remote workers and professionals working principally for organisations or clients outside Spain.
Each visa has its own qualification criteria and rules, such as minimum income requirements, conditions linked to residency and specific permitted working arrangements. In every case, expats need to understand how their income, pensions or investments will be taxed, revisiting this each time they move or apply to a new regime.
Visas themselves are linked to permissions to live and work in a country, but a visa and tax residency are two different things. This can mean digital nomads transition through several jurisdictions over a number of years, and need to continue to understand how every move will affect their finances.
An expat might initially regard a digital nomad visa as a relatively simple way to spend time overseas, but as the length of their stay increases and their tax residency changes, financial ties and longer-term plans might also change, with temporary lifestyle decisions sometimes leading to permanent relocations.
Why Cross-Border Income Needs to Be Considered Before Relocating
In many cases, remote workers might continue receiving employment income from a UK employer, freelance or consultancy income from overseas clients and dividends from a business, sometimes alongside investment, rental and pension income.
Moving abroad may change how some or all of those income sources are treated. Expats are, therefore, advised to think about where they will be tax resident, where their income originates, and in which places they will need to file returns and declarations.
Professional cross-border financial advice can help individuals identify how these factors may affect their overall financial position, because tax treaties might impact their overall tax obligations, investment income might be classified differently between jurisdictions, and becoming a permanent resident could carry different long-term implications than living as a digital nomad for a limited number of years.
This can be especially relevant if a person has several income sources. Depending on their tax status, employment earnings might be treated differently from dividends, rental income or investment returns. Pension income can give rise to separate considerations depending on the type of pension, the individual’s tax residence and the provisions of any applicable double taxation agreement.
Expats’ tax positions can become even more complex when a spouse or partner has a separate income, or where assets and business interests remain in the UK after a move overseas.
How Currency and Investment Risks Can Change With Global Mobility
Expats who work remotely often need to manage multiple currencies, perhaps receiving income from the UK while holding savings and investments in different denominations and having expenditure in the currency of their place of residence, creating mismatches.
Currency exchange rate movements can affect day-to-day spending power, the value of investment returns when measured or converted into the currency in which the individual spends, and transactions such as property purchases, transfers between countries and drawing on retirement funds.
Internationally mobile individuals also need to think about where their investments are held, how well diversified they are, and whether their existing portfolios remain appropriate after a move and whenever relocating from one place to the next.
Importantly, a product, strategy or plan that appears to be efficient, or that takes advantage of specific tax treatments in one place may not remain so when moving elsewhere, or when becoming a tax resident somewhere new.
Building a Wealth Strategy That Can Move With You
One of the principles of wealth management for globally mobile people is that this requires financial flexibility, especially for expats who work under digital nomad visas and intend to continue travelling and exploring different countries, while working or freelancing from their home country.
As an example, a freelancer might move from the UK to Portugal, onward to Spain, and then back to the UK, or intend to apply for a digital nomad visa initially with plans to settle overseas permanently in the future.
Their wealth strategy needs to accommodate these and any other relevant possibilities. Eldridge clarifies that, ‘A wealth strategy should reflect where the individual is now, and where they might become a tax resident in the future.
Internationally mobile clients commonly benefit from periodic re-evaluations, because every change to their residency, income, family circumstances, investments and long-term plans might dictate whether any adjustments are needed.’
While global mobility might have given professionals and families more freedom to decide where they live and work, cross-border moves also require careful consideration of their finances, looking at visa conditions, tax residency status, overseas income, and currency exposure, which can influence whether their existing wealth strategy remains suitable.
Taking the time to review these factors before and during any overseas move can help individuals build a strategy that can accommodate their changing circumstances, whether their relocation lasts for a few months, several years or becomes permanent.
About Chase Buchanan Private Wealth Management
Chase Buchanan is a highly regulated wealth management company that specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, the UK and the USA.
Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15 and offers its services in the EU on a cross-border basis as per the provisions of MiFID.
Chase Buchanan Insurance Services, Agents & Advisors is authorised and regulated by the Cyprus Insurance Companies Control Service with License No 6883 and offers services in the EU on a cross-border basis as per the provisions of the Insurance Distribution Directive (IDD).
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